The failure of President Muhammadu Buhari to assent to the 2016 budget over disagreements with the National Assembly has created uncertainties in the economy, The delay in signing the 2016 Appropriation Bill into law by President Muhammadu Buhari has worsened the economic crisis currently facing the nation, economists and analysts have said.
According to them, by the time the National Bureau of Statistics will release the economic growth data for the first quarter of this year, many Nigerians will realise that the delay in signing the budget has caused tremendous harm to the economy.
An economist and Chief Executive Officer, Cowry Asset Management Limited, an investment and research firm, Mr. Johnson Chukwu, said, “The economy grew at 2.11 per cent during the fourth quarter of 2015. When the data for the first quarter of 2016 is out, we will realise that the delay in signing the budget has almost paralysed economic activities.
“Apart from the fact that the government is a major player in the economy, many economic sectors and activities are tied to the implementation of the budget. This is why you see that the failure of the government in signing the budget is having adverse effects on the economy.”
For the Head of Investment Advisory and Research, Afrinvest West Africa Limited, a Lagos-based investment bank, Ayodeji Ebo, hundreds of companies have refused to sign some contracts and new deals due to the Federal Government’s delay in signing the budget.
This, he said, had exacerbated the slow growth the country was experiencing and led to higher level of unemployment.
“The prolonged non-implementation of the budget will continue to affect the economy adversely. Besides, the available liquidity in the economy cannot be increased for the growth of the economy until the budget is signed. The earlier the government does this, the better for us,” Ebo added.
The Nigeria Labour Congress said the delay in signing the budget was unfortunate as it was causing further damage to the country’s already weak economy.
The General Secretary, NLC, Dr. Peter Ozo-Eson, told one of our correspondents that the budget was expected to show the policy direction for economic agents to plan.
He said that further delays in implementing the fiscal document would do more damage to the ailing economy but that its immediate assent would bring back some money into the economy and strengthen it.
Ozo-Eson said the organised labour was disappointed that the budget had not been signed into law several months into the year.
He said that while the NLC was supportive of the need to correct observed errors in the budget, such should be done speedily for the budget to be assented to for the implementation to commence.
He said, “Our position has been that the delay in passing the budget is, because it actually weakens the economy. The economy is already in a very grave crisis and the budget ought to at least show signals of the direction the government wants for the economy, and that will at least give a chance for economic agents to plan.
“Apart from that, if you start to implement the budget, that will bring in some money back into the economy and therefore bolster the aggregate economy that is so weak now. Therefore, the more we wait, the more damage is done to the economy.
“And it is in that context that we are disappointed that it has taken this long to have the budget signed. While we understand that the correct things need to be done and any error in the budget needs to be corrected, these are things that should be done speedily and then move on with the implementation of the budget.”
Ozo-Eson called on the President and the National Assembly to adopt all the necessary measures to harmonise their respective positions on the budget and start its implementation.
He suggested that the President could come up with a supplementary budget if necessary, adding that the NLC had not taken any resolution as a response on the issue of the budget, but was aware that it was an important assignment that the National Assembly and the executive must resolve urgently.
The labour leader stated, “If it then becomes necessary later to come up with a supplementary budget, then that can be done; but we think that both the National Assembly and Mr. President should do all that they can do to ensure that this budget is signed into law and the implementation starts.
“We can’t be talking of a timeframe; this is almost the end of April, we can’t be talking of a timeframe; what is required is an immediate action for the budget to be signed and for the implementation to commence.”
“We have not taken a resolution as a response to that but we know that it is an important thing that needs to be done and we call on government and the National Assembly to do this speedily,” he added
The President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, said the failure to sign the budget and its non-implementation had left the manufacturing sector in a limbo.
According to him, manufacturers are unable to take decisions as they are uncertain of the government’s policy direction owing to the delay in the implementation of the budget.
He said, “Manufacturers cannot make decisions. They need the budget to know the policy direction of the government and the decision on interest rate, which is one key area they are concerned about.
“The whole situation is compounded by the lingering fuel scarcity, which has increased the cost of production astronomically.”
The Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, agrees with the MAN president.
According to Yusuf, the delay in signing the budget has contributed to the growing feeling of uncertainty in the economy.
He said, “The delay is an additional factor that is contributing to the uncertainty that already exists in the real sector, because the budget has some fiscal impact.
“There are contractors and service providers to government who have all positioned themselves to see what will come from the budget and how they can be part of it. The government also owes some contractors and it needs the passage of the budget to be able to pay those contractors.”
The LCCI DG noted that the N350bn set aside to reflate the economy as earlier announced by the Minister of Finance, Mrs. Kemi Adeosun, and the Federal Government’s social welfare package would come from the budget.
Yusuf added, “Many stakeholders and citizens are looking forward to the N350bn and the social welfare package to bring some activities to the economy.
“The delay will also affect the implementation, because if you have to cramp 12 months spending into seven months, you will be faced with liquidity challenges.”
An analyst at WSTC Financial Services Limited, Mr. Tola Oni, said the non-signing of the budget meant delaying the fiscal arm of the economy.
This, he noted, had no capacity to compliment the current monetary policies of the government, and was rather capable of foiling some laudable monetary policies.
“Almost all the sectors of the economy are suffering from this setback. But it is worth emphasising that sectors like the industrial goods sector, and to some extent, banking, are the worst hit,” Oni said, stressing that the gap would largely pressurise the country’s monetary stance. Punch
